to me, the question of console gaming doesn't give the full picture. console gaming is just a sub category of the larger category that is dedicated hardware.
i made this handy graph a week ago, and i think it help explains my outlook.
i could go back a bit further, but the nes is where things started with the current third-party/first-party model.
anyway, what we see is a trend of growth from the generation where the nes led all the way to the generation where the ps2 led. then there was a tremendous spike where
everything that was dedicated hardware took off. software's a bit of another issue (sony saw a lot less versus the ps2, thanks to handhelds not being so great, although micrsoft and nintendo more than made up for that discrepancy), but basically there was more room for everything. sony sold more systems than ever. nintendo sold more systems than ever. microsoft sold more systems than ever.
and then there's a massive collapse in the succeeding generation, and it's happening almost everywhere. sony may sell about 115m-125m pieces of hardware, microsoft about 50m, and nintendo around 75m, each doing less than the previous gen and the worst aside from their first generation on the market (although nintendo did have hardware in the 70s and early 80s, it wasn't part of the model started with the nes).
now i don't think console gaming is ending with this generation. there's too much money tied up into it and frankly, i don't think customers who would buy assassin's creed and whatnot are fully ready for the next step, whatever that is. however, the seeds are definitely being laid for next gen to be a much more obvious transition period. wb, ubisoft, ea, and microsoft all have their eye on a future controlled by an internet account. sony has ps now and psn, and nintendo has their upcoming service and new mobile games. on the japanese development side, we pretty much have only koei tecmo and bandai namco as the big studios really giving it what they got on the dedicated hardware space. there are small companies too like nihon falcom, atlus, nis, and idea factory, but they either make games for a niche market, or for the only successful one. they're not investing to grow the pie bigger so they can have a bigger part of it.
the result is less variety and fewer risks. i think the order may have somewhat unfairly turned into the poster child for this sort of thing, representing the high budget and narrow vision this part of the industry has been left with after the dust settled from the mergers and closures of the previous generation. but if there's going to be less variety, there will be fewer people the industry appeals to.
i predict two futures for the dedicated space. one is based on something coming from somewhere and garnering so much interest in the space that it brings people back in a much more permanent way. this means dedicated hardware will need to do something that cannot be done anywhere else for the same cost and accessibility. the other is where hardware becomes a thing for hobbyists, kind of like vinyl in an age of mp3 players and streaming music.
